In February, Eater asked if meal kits were on their deathbed. Forbes said the food trend was “DOA.” A Smart Futures report called the only decade-old industry “doomed.” These eulogies arrived after years of losses, subscriber churn and concerns about sustainability, both fiscal and environmental. The novelty had worn off. 

These outlets didn’t know that a month later, a global crisis would close restaurants and make people fear their local Giant, turning the home cooking fad into a staple. Americans spent $100 million on meal kits in the month ending April 11, doubling sales from 2019, according to Nielsen via WSJ. Earnest Research shows online meal-kits growing 63% over the same period. The industry is cautiously predicted by GroceryDive to hit 20 billion by 2027 and see 13% annual growth. (With shoppers at home, subscription boxes and kits in general are seeing a boost with one big exception.)

Which companies are appealing the most to locked up diners?

Blue Apron regains ground, but is still shaky

Blue Apron went public at $2 billion in June of 2017, with shares priced at over $140. They’ve since lost 98% of their value according to Food Navigator. In March, the company saw its first profitable quarter since going public. Still far fewer than the million plus subscribers Blue Apron had in 2017, the company added around 20,00 new customers in the first quarter, totaling 396,000. Average revenue per customer rose to $331 from $265 the prior year (the first time over $300 in five years). The company’s growing to accommodate new demand. Blue Apron job listings are up 36% since early March, alongside their share price. 

While Blue Apron is certainly among the companies seeing increased demand, with their share currently hovering between $11-12, they have their work cut out for them getting investors excited.

Speed and simplicity are king, show HelloFresh, Home Chef and Sun Basket

Blue Apron offers gourmet meals. Speed and simplicity are driving the market however. According to GroceryDive, the largest share of the meal-kit market is taken up by “heat-and-eat” meals (versus “cook-and-eat” meals). Berlin-based HelloFresh, the market leader known for its unfussy recipes, quick prep times and ready-to-eat options, sells more meals in the US than any of its peers according to WSJ. It’s not surprising that HelloFresh grew its active customer base by 88% in the first quarter. The company added more than a million new customers, bringing them up to 4.2 million total, dwarfing Blue Apron’s customer growth.

HelloFresh revenue is up 66.4% globally, and 82.3% in the US, reports Progressive Grocer. The company has range: it also owns budget kit brand EveryPlate and vegan/paleo brand Green Chef. Convenience and range is a winning strategy, according to Google Trends, HelloFresh has the highest spike in search traffic since the pandemic of any meal kit brand.

Organic brand Sun Basket and Kroger-owned Home Chef are also winning based on convenient, flexible options. Home Chef’s “Oven-Ready, 15 Minute Meals and Grill-Ready Meals,” helped them triple their customer count in March and April. Sun Basket has doubled demand since the pandemic, with their microwavable oven-ready meals accounting for half of their orders in the first half of 2020. Their strategy has also included narrowing recipe options to keep up with demand and retaining customers through strong engagement over text, social media and email, according to WSJ.

Seniors are an important market

Freshly, known for gluten-free single-serve heat-and-eat meals, delivered nearly a million more meals in March than February according to SmartBrief and saw 20% of their customers up from six to nine weekly meals. That was due to their appeal to older customers adjusting to quarantine life: they’ve doubled subscribers over 60, who now make up over half of their customer base. With the elderly avoiding the grocery store, “Best meal kits for seniors” lists are a good place to be.

The landscape is crowded, and innovation is coming

Marley Spoon, Gobble and other meal kits have been cashing in as well. However, meal-kit companies are seeing competition from all sides. Shake-Shack, Dennys, Taco Bell, Chick-fil-A,  Panera and Just Salad have all launched kits of their most popular meals. These products are just as convenient as something like Blue Apron. And it’s not just fast food. Local eateries like LA’s Broken Spanish and Chicago’s Girl & the Goat are now shipping DIY kits for their best-selling menu items all over the country.

Giant companies are seeing if they can scoop up some business, too. Amazon Fresh has been copping some of HelloFresh and Blue Apron’s market share since 2017. Kraft Heinz’ incubator Evolve recently launched a kit delivery service called SupperUp in partnership with Instant Pot.

Will the meal-kit boom last after lockdown? 

Both investors and consumers of meal-kits are historically flaky. HelloFresh shares fell 6% on May 27, the day the U.S. National Institute of Allergy and Infectious Diseases said there’d be a Covid-19 vaccine by the end of 2020. Fewer than 10% of meal-kit subscribers last more than two years, according to analytics company Second Measure.

But as we’ve seen, there's not going to be a definitive “end” to lockdown. Anxieties around restaurant safety will linger, even as dining rooms open, especially with second waves popping up around the country. It’s possible, as Americans continue to work from home, that demand for restaurants never quite goes back to what it was, and meal kits will become integrated into home cooking routines. 

However, companies will need to innovate, and hone in on what they have to offer that restaurants don’t if they want to survive. Food Navigator predicts that brands like Blue Apron, which recreate restaurant-level food, will have less longevity when restaurants reopen, than those that prioritize efficiency, convenience and affordability.

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